Hobart turns on a big welcome for a small city. Forty or 50 of the local restaurants take out space in a former waterside warehouse and produce a mixture of food from Turkish to Hmong, from barbecue to Pacific Rim. Friendly and charming it is, glamorous and exotic it ain’t.

But that was where I saw Murdoch coming through the crowd. Of course, he had changed since I had seen him last, but television and newspaper pictures provide a certain continuity. I had expected him to be thinner and grayer, and he was. There was also a certain fragility about him. There he was, walking through the crowd carrying his biodegradable plate and biodegradable knife and fork and putting them in the correct bins. I realized that this was the average fragility of a 65-year-old among a crowd of robust carousers whose average age would be less than half his. Anonymity is not often his, and without the reinforcement of his acolytes he seemed almost humble — quite different from the first time I met him.

In 1964, Murdoch was in his mid-30s, plumpish, cherubic, with curly hair that had still only receded as far as Julius Caesar’s. He wore drip-dry white shirts with rolled up sleeves and red and blue paisley ties that revealed his affection for all things journalistic — right down to the awful clothes.

He had gone from owning an inherited share in an Adelaide newspaper to trying to conquer Sydney, and Sydney’s media establishment had decided to teach him a lesson by selling him the Daily Mirror, a newspaper they were convinced would sink him. (Surely, these were the first of many media magnates who would later file that strategy away under the heading “Mistakes, Big: Selling to Rupert Murdoch in Order to Choke Him on Debt.”) For the first two years, it looked as if they might succeed in sending the young upstart back to Adelaide with his tail between his legs. The Daily Mirror had the lowest circulation of the four afternoon newspapers in a city of around 2 million.

In the beginning, Murdoch had some trouble getting the tone he was seeking for the Daily Mirror. There were plenty of hard-drinking pros among the journalists (this was the school that produced Steve Dunleavy, star of U.S. tabloid television), and their natural inclination was down-market. There was no ideological argument there, but they only seemed capable of producing their own tired formula version of a down-market paper. The Daily Mirror was still coming in second in the circulation war, and even further behind in demographics. Its image was irretrievably down-market, but the advertising dollars in Sydney came from the up-market department stores. So Murdoch looked around for a new editor, someone young and energetic, someone tabloid but with a bit of class. He chose Zell Rabin, an American, who had been the New York correspondent for the Daily Mirror.

Zell, 28, was working happily in New York when Murdoch lured him to Sydney. Zell took journalism seriously, and though few are privy to conversations between a recruiting newspaper owner and a prospective editor, it seems unimaginable that questions about editorial freedom wouldn’t be raised.

When Zell arrived in Sydney he certainly seemed as though hed been promised some kind of editorial freedom. But, despite his swagger, the hardheads among the journalists were skeptical. Zell was responsible for what went in the paper, but Murdoch liked checks and balances built into the editorial system. So Zell had no jurisdiction over promotions.

That role fell to my boss, Graham King, the promotions manager. In the time before television existed in Australia, Graham was a draftsman in Adelaide. Once television started Graham wanted to get into it — desperately. So as soon as Channel 9 Adelaide opened, Graham contacted them and stayed in contact until they gave in and let him work for nothing. With a wife and two young children, a salary of nothing made survival a tenuous business. Eventually, the station manager paid him something, and it led to Graham meeting Murdoch. Channel 9 Adelaide is the first television station Murdoch ever bought.

Soon after this meeting, Graham started his campaign to win a raise. Every day he sent Murdoch a dirty sock with a hole in it and a cover letter saying he couldn’t afford to buy new socks. Finally Murdoch relented, gave Graham the raise and gained a loyal and able supporter for the next 30 years.

When Murdoch started the march of a thousand takeovers, Graham followed him to Sydney. Graham was the promotions manager for News Ltd., and he hired me, a 21-year-old, as assistant promotion manager. (Titles were lavishly offered, salaries less so.)

One of my jobs was to go down to the editorial floor each morning around 9, find out what stories were around, select the most promotable, write a couple of 30-second radio commercials and phone them through to the radio station. When the paper hit the streets around 11 a.m., people would buy the Daily Mirror on the basis of a specific story.

On what would become the day of my first meeting with Murdoch, my choices were “Arms Buildup in the Middle East,” “Coal Miners to Strike” or “Model Murdered in Love Nest.” No question which one was most important in global terms, no question which one was most important in terms of its local impact and there was also no question which one would sell the most newspapers.

Naturally, Zell favored promoting the “Arms Build-Up in the Middle East” story. My mission was to sell papers, however, so I disregarded his directive and went for “Model Murdered in Love Nest.” There were a lot of love nests in Sydney in the days before no-fault divorce, and I guessed — correctly, it turned out — that the story would be of great interest to lawyers and executives.

When, that afternoon, I heard a voice on the phone saying, “Rupert here. Get down to my office. Now.” I first thought Murdoch might want to congratulate me on the day’s increased sales — but from the tone of his voice I sensed he was having difficulty expressing gratitude.

His office was very large and timber-lined, but seemed somehow impermanent, as though it were designed to be enlarged, reduced or moved at a moment’s notice if the need arose. But I wasn’t thinking about that as I made the long walk from the door to Murdoch’s desk.

Zell was sitting on one side, Graham on the other. Graham winked at me behind his hand like Groucho Marx. Zell had the air of a man who had fought the good fight and emerged triumphant. Murdoch was on the phone.

I stood before him, feeling as though I were suspended in time and space. After a burst of staccato monosyllables, he hung up and, without skipping a beat, turned to me and launched into a mighty tirade about the value of good editors and the integrity of the Daily Mirror. Around News Ltd., these words had rarely been uttered together, and I was surprised. I was at the center of a hurricane that filled my ears and my brain. Just as I thought it couldn’t possibly get any louder, it did. As his low, grating tone moved up the register, the pressure on the vocal cords was so great that words started to break up.

Tall and skinny as I was, I could feel my body bending like a coconut palm in the onslaught of a great force. Finally, when I thought that only crying could save me, I blurted out the only words I said to him that day: “But sales have gone up.”

There was a flicker in his eyes, a momentary pause, a slight loss of rhythm in his desk-pounding — and then he swept up a pile of Daily Mirrors from his desk and flung them at me. Newspaper fluttered all over the room. I wasn’t sure about the protocol. Should I ignore the tabloid sheets fluttering around my ears? Should I pick up the papers as if he had accidentally dropped them? One sheet wrapped itself around my leg. The strength and volume of his last statement — “Don’t argue with the editor again” — persuaded me simply to leave. I walked out with leg flapping, kicking away the newspaper.

I walked downstairs in shock. I had thought my father a master of abuse,
but Murdoch was a virtuoso. His attack had an operatic quality that I
almost admired. Perhaps most bizarrely, as I withstood this violent
assault, I also detected a note of impartiality in his voice. If he had
added “nothing personal” to his diatribe, I would have believed it. At
that moment, I had been simply someone standing between Murdoch and
where he wanted to go. But my ears were burning, my eyes stinging and
my sense of injustice raging.

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The share price of Murdoch’s company was at the time going up and down
like a bride’s nightdress, and at one point, it was so low that $10,000
Australian would have bought something like 1 percent of News Ltd. Rumor
was the Murdoch family company was buying the shares in the face of a
skeptical market.

Of course, he was right. Within a couple of years, the Daily Mirror
surpassed the Sun in circulation, and a couple of years after that, he
bought the other morning paper, the Daily Telegraph. The Sun folded and
Murdoch combined the Daily Mirror and the Daily Telegraph. He soon had
the largest circulation newspaper in a two-newspaper city of 4 million
and makes some serious money out of Sydney.

This was back when Murdoch was just getting started: He now is the
world’s most powerful controlling owner of an international media
megacorporation. The $10 billion-a-year News Corp., as it’s now called,
owns newspapers, TV stations, book publishing companies, cable networks,
20th Century Fox, the Fox TV network and sports teams.

Whenever I think of Murdoch I think of that day in Sydney. As I sat in
my office stinging, Graham dropped in a few minutes later.

“Rupert said you did well down there and wants to offer you a salary
increase.”

“Christ,” I said. “I thought he was going to fire me.”

“Nah! Set-up for Zell’s benefit. You said the magic words — sales have
increased. And he also said you picked the right story. Keep it up.”

Their findings grabbed attention not just in the UK but across the Atlantic, where headlines in the New York Times, Washington Post and Murdoch’s own Wall Street Journal must have made uncomfortable reading for News Corp. staff and shareholders.

The committee’s judgment carries no threat of sanction, but with lawsuits pending in the US over hacking and the threat of possible prosecution under the powerful Foreign Corrupt Practices Act, it will offer little in the way of reassurance.

Having conceded that the British parliamentary inquiry was right to highlight “serious wrongdoings” at the now defunct News of the World title, News Corp. took issue with the “unjustified and highly partisan” verdict on its boss.

Murdoch himself issued a statement to staff admitting mistakes but declaring that “our business has never been stronger.” News Corp.’s board also issued a statement saying it had “full confidence” in its CEO and chairman.

However, with criticism of Murdoch continuing to mount in the UK, questions were being raised as to what extent the report would harm his business interests both here and in the United States, with some shareholders suggesting it was time to shift power out of Murdoch’s hands.

A day after the report, elements of his $50 billion media empire appeared to be attempting to distance themselves from Murdoch, not just by prominently reporting the committee’s scathing assessment, but by explicitly stating their independence of his command.

There was speculation that a small surge in News Corp. share prices in the wake of Tuesday’s verdict reflected anticipation that the company would soon divest itself of its troubled UK newspaper titles and set wheels in motion to reduce Murdoch’s influence over the company.

Rupert Murdoch is “finished in the United Kingdom,” wrote Michael Wolff, author of “The Man Who Owns the News,” an unauthorized biography of the News Corp. founder. “Understanding that Britain is a lost front, he will retreat to his U.S. stronghold. From New York, the process of disposing of the British papers, which, by reliable insider accounts, has begun, will hasten.”

Of primary concern in the UK is whether the “not a fit person” verdict will have any impact on a separate inquiry by British communications industry regulator Ofcom over whether News Corp. is a “fit and proper” owner of a lucrative 39.1 percent stake in prominent broadcaster BSkyB.

Any decision that would force News Corp. to offload its BSkyB holding would be a considerable blow to the media giant, which had hoped to buy the broadcaster outright but later abandoned the deal after the phone hacking scandal inflamed opposition.

On Wednesday, BSkyB’s chief executive, Jeremy Darroch, used the publication of record financial results to disassociate his company from Murdoch and — clearly wary of the threat to its prized broadcast license — talk up its annual $1.6 billion tax contribution to the British economy.

“I would emphasize that it’s important to remember that Sky and News Corporation are separate companies,” he told reporters. “We believe that Sky’s track record as a broadcaster is the most important factor in determining our fitness to hold a license.”

Aware of the potential damage his presence could bring to the company, Murdoch’s son James last month stood down as chairman of BSkyB, saying he didn’t want to be a “lightning rod” for criticism over the hacking scandal.

Speculation is now mounting over whether the News Corp. brand will also be vulnerable to critical, financial and legal thunderbolts if Murdoch senior resists shareholder efforts to usher him into a backseat role.

“I think you have to be careful about extrapolating from what has been an appalling set of circumstances around one newspaper group … to the continuing demise of News Corp.,” said Charlie Beckett, director of Polis, a media and society think tank at the London School of Economics.

Beckett said that while the parliamentary verdict would certainly cast a shadow over any News Corp. deals, mergers or takeovers in the future, there was nothing inevitable about the demise of the company or its subsidiaries.

Likewise, he said that while there was support for scaling down Murdoch’s control over News Corp., shareholders would also bear in mind the fact that the media tycoon’s sharp business acumen has consistently paid dividends, regardless of any questions of ethical culpability.

“There are some people who would welcome the defamiliarization of the company, but you could also argue that this is a guy who has an extraordinary track record on delivering profit,” he told GlobalPost.

Beckett said that plans would already have been in place to arrange a succession of command, and while these may now be fast tracked down from five years to two, News Corp. would be unwise to proceed with too much haste.

“It’s in everyone’s interest for the thing to not fall apart in the next year or two. Even those people who want Murdoch to recede don’t want him to jump out of the top floor. That would be far too destabilizing.”

Now, Murdoch appears to be fighting back.

He and his son James were in the U.K. this week to face the Leveson inquiry, a judicial investigation into press standards, begun last year in the wake of revelations that journalists at Murdoch’s U.K. titles illegally hacked the voice mails of prominent public figures.

This time, he and his family appear to have turned on the British establishment, pressuring Prime Minister David Cameron and putting a key minister in the spotlight over a controversial business deal.

In his evidence on Tuesday, James Murdoch released documents that appeared to show that Jeremy Hunt, a media minister charged with examining a $13.4 billion bid by Murdoch’s News Corp. for full control of British Sky Broadcasting, had secretly helped to progress the deal.

The revelations sent Cameron’s government into a tailspin. Cameron pledged to stand by Hunt — who is overseeing the 2012 Olympics — while Hunt himself was forced to defend his actions to Parliament, denying claims he gave News Corp. a “back channel” of influence over the bid.

In an attempt to limit the damage, Hunt’s advisor Adam Smith — a key link in communications with James Murdoch — tendered his resignation at the same time that a relaxed-looking Murdoch senior was taking the stand to deny he held any sway over Britain’s politicians.

News Corp.’s bid to buy BSkyB was ruled out last year in the wake of the phone-hacking scandal, an outcome that soured the once-cordial relations between Murdoch and Cameron. This breakdown appears to have set the tone for Murdoch’s reappearance.

Even before giving evidence at the Leveson inquiry, Rupert Murdoch appeared to be on the offensive against the government. Last month he took to Twitter to complain about “old toffs and right wingers” — a likely dig at the British establishment.

More followed when he arrived in London last weekend. In one tweet he criticizes the economic policies of Cameron’s government. “Govt sending IMF another ten bn to he euro. Must be mad,” he wrote.

Murdoch’s offensive and the question mark over Hunt couldn’t come at a worse time for Cameron. His government is already under fire for provoking a recent fuel crisis and for a financial budget that was derided in Parliament as an “omnishambles.”

A recent poll showed the ruling Conservatives have lost their command over the main opposition Labour Party, largely as a consequence of the budget.

To make matters worse for Cameron, it was announced on Wednesday that Britain had slumped back into recession despite forecasts of economic recovery.

But, despite his tweets, Murdoch insists he hasn’t been gunning for the government. Asked by Leveson counsel Richard Jay if “rumors” were true that he had not forgiven Cameron, he said they were not. He added: “Don’t take my tweets too seriously.”

Speculation had been rife that Murdoch would use his Leveson appearance to launch a “slash and burn” offensive, as one commentator put it. Some speculated his revelations could take direct aim at Cameron, possibly making the prime minister’s position untenable.

The Brookses were arrested, along with four others, “on suspicion of conspiracy to pervert the course of justice.” This was the second time Rebekah Brooks, the former editor of the Sun and the now-shuttered News of the World, had been arrested — the last time it was for conspiring to intercept communications, or “phone hacking” — and this arrest suggests that News International’s extensive efforts to cover up their unethical practices may end up damaging the company just as much as the unethical practices did.

Brooks’ newspapers gathered a great deal of news by illicitly listening to the voice-mail messages of celebrities and members of the royal family and murder victims. They also had a private investigator on contract to do other law-violating things, and they had a bribery budget that would make most American newspaper publishers jealous. Once Murdoch’s British newspaper empire faced civil, criminal and Parliamentary inquiries, they went on an email-destroying binge. They have since become much more cooperative, but deleting half a terabyte worth of emails to and from executives and destroying computers used by journalists under investigation is really not a sound legal strategy.

James Murdoch, still the News Corp. heir apparent, has written a note of apology to members of Parliament. He owes them an apology because the recoverable emails among the deleted cache strongly indicate that he lied to Parliament about his awareness of the extent of phone hacking. James has also essentially fled the country, having resigned from his father’s British newspapers company and taken a job at his American-based international pay television company.

Meanwhile, British Prime Minister David Cameron is in the middle of his well-publicized state visit to the United States. Barack Obama has taken him to a “basketball match,” which Cameron found “hard to follow.” The right-leaning U.K. papers have been extremely overexcited in their coverage of the PM’s visit, because, again, national insecurity.

Cameron was surely thrilled to be out of the country when the Brookses got collared. They’re neighbors and close personal friends. Charlie Brooks and Cameron go way back — they attended Eton together, and as equally ridiculous posh stereotypes they got along famously — and earlier this month it was revealed that Cameron had ridden a retired police horse that the Met had for some reason given to Rebekah Brooks. (The only way the ensuing scandal could’ve been more British is if it had involved a Tory MP and a dominatrix.)

Speaking of horses, Charlie Brooks has one running in a race today. As the Guardian noted, he had a column published the day he was arrested in which he said, tragically, that “the happiest moment of my year is about three hours before the first race at Cheltenham on Tuesday.”

As for old Rupert himself, he hasn’t tweeted anything since Saturday. But he assured employees at the Sun that they’re in the clear, and he’s headed to London to perform damage control. His British newspapers hold a special place in his heart, making it a bit poignant — or hilarious, depending on your perspective — that that tiny arm of his vast international empire is the one that is currently destroying everything he’s spent a lifetime building.

The Guardian is delightfully liveblogging the meeting, which is handy, because News Corp. banned all cameras and recording devices. Audio of the meeting was streaming on the News Corp. corporate site for investors or those willing to claim to be investors on a registration page, but it just ended while they hold their shareholder votes. As he took questions, Murdoch sounded much more involved and feisty than he did in his confused appearance before Parliament earlier this summer. “I’d hate to call you a liar, but I know exactly how you’re going to vote,” he said to a hostile questioner who claimed to have not yet made up his mind.

Watson rehashed the various criminal complaints against News Corp. and added allegations of computer hacking. Others complained about Murdoch’s management of the corporation as a sort of personal fiefdom, with nepotism rampant. One guy wanted to talk about animal rights for a while.

Media Matters has the audio of Watson’s questioning:

Murdoch is not in much danger of losing his company. As Reuters says, he has 40 percent control of voting shares, and next largest holder is Murdoch ally and Saudi Prince Alwaleed bin Talai. But the L.A. Times suggests News Corp. president Chase Carey could end up being promoted to CEO.

There are three crucial votes: The vote to reelect Murdoch and the rest of the board, the vote to cut Murdoch’s pay, and a vote to specifically force Murdoch to step down. He’ll probably win all three but the votes could be close enough to force the board to make some changes. And in the longer term, this could ruin Murdoch’s plan to have one of his kids run the company some day. (Son Lachlan having failed, Rupert still has to choose between Elisabeth and James.)

All the “media watchdogs” in the world will never remove Murdoch from power or shame him into changing his business practices, but once major institutional investors revolt, there’s a serious possibility of the end of the Murdoch era. Money, as always, speaks loudest.

That touched off a storm of public outrage that rocked Murdoch’s media empire and ricocheted through Britain’s political, police and media establishments.

“Nothing that has been agreed will ever bring back Milly or undo the traumas of her disappearance and the horrendous murder trial earlier this year,” the Dowlers said in the statement. “The only way that a fitting tribute could be agreed was to ensure that a very substantial donation to charity was made in Milly’s memory. We hope that projects will be undertaken so that some good can come from this.”

Murdoch met with the Dowlers in July to personally apologize to the family, saying he was “appalled” to have discovered what happened.

In the statement Friday, he said he hoped something positive can be done in memory of Milly.

“The behavior that the News of the World exhibited towards the Dowlers was abhorrent and I hope this donation underscores my regret for the company’s role in this awful event,” he said.

The revelation that reporters eavesdropped on Milly Dowler’s voice mail messages while police were searching for her — and mounting evidence that phone hacking was routine at the newspaper — scandalized the British public.

In a letter to lawmakers disclosed Thursday, Surrey Police Chief Constable Mark Rowley acknowledged that his force knew as far back as April 2002 that someone working for the News of the World had accessed Dowler’s voice mail, giving false hope to the missing teen’s family and potentially interfering with the investigation into her disappearance.

The phone hacking scandal has forced the resignation of two of London’s top police officers, ousted executives at Murdoch’s News Corp. and claimed the job of Prime Minister David Cameron’s former spin doctor, Andy Coulson, an ex-News of the World editor.

Murdoch’s global News Corp. has expressed contrition, launched an internal inquiry and set aside 20 million pounds ($32 million) to compensate victims, who could number in their hundreds.

Still, the News Corp. CEO is under pressure. On Friday, he will face shareholders with small stakes in his company for the first time since the phone-hacking scandal broke in July.

British lawmaker Tom Watson, one of Murdoch’s fiercest British critics, traveled to Los Angeles to attend the annual general meeting and has said he plans to use the event to reveal new details of what he claims are covert surveillance techniques by company employees.

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Associated Press writer Jill Lawless contributed to this report.

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Cassandra Vinograd can be reached at http://twitter.com/CassVinograd